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Amazon and Flipkart face antitrust investigation in India

The Competition Commission of India (CCI) has initiated an investigation of Amazon and Flipkart for allegedly hurting local businesses by violating competition law.

According to the CCI, the investigation will be carried out following a review of allegations that the companies had been treating other businesses unfairly by promoting “preferred sellers” on their shopping platforms.

According to the CCI, India is the world’s fastest-growing e-commerce market, while Amazon and Flipkart are the two largest e-commerce platforms in the country. Walmart bought a 77 per cent stake in Flipkart for $16bn in 2018; the platform is known for its sale of apparel, books and electronics and for its mobile payments service PhonePe.

The complaints against the companies were filed by Delhi Vyapar Mahasangh, a group representing small businesses, which argued that “preferred sellers” promoted on the platforms were owned by or affiliated with Amazon and Flipkart.

The CCI has acknowledged claims of four anticompetitive practices by the companies: exclusively launching mobile phones; promoting preferred sellers; some discounting practices, and promoting some listings over others. The CCI commented that these practices “create an ecosystem that may lead to an appreciable adverse effect on competition”.

Discontent with the foreign-controlled e-commerce companies has been bubbling for several years in India, with Reuters reporting that local brick-and-mortar traders having long alleged that the companies violate Indian foreign investment laws and are in a position to spend billions undercutting smaller companies.

The Confederation of All India Traders, a trade group representing brick-and-mortar shops, told CNN: “Both Amazon and Flipkart have left no stone unturned in destroying and devastating the e-commerce and retail trade market by indulging in all kinds of malpractices. Their autocratic business model has resulted in the closure of thousands of shops.”

The antitrust investigation will be carried out by a specialist CCI unit over the next two months, although it could take longer.

Both Amazon and Flipkart state that they have not broken local laws. Flipkart senior VP Rajneesh Kumar commented that the company is “fully compliant” with all laws, while Amazon stated: “We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance and will cooperate fully with the CCI.”

The investigation was announced as Amazon CEO Jeff Bezos sets off for India to host an event focused on small businesses in New Delhi, as well as for a series of meetings with government representatives (potentially including Prime Minister Narendra Modi).

In July 2019, the European Commission initiated its own investigation into Amazon’s business practices – focusing on its data agreements with retailers – having collected information from retailers on Amazon’s dual role as both a marketplace and also a competitor in said marketplace.

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